a central premise of monetary policy in the U.S. throughout the first decade of the 21st century has been a firm commitment to avoid deflation, that is, a persistent fall in the price level. indeed, it is the consensus view of policymakers and most economists.1 central premise of monetary policy in the U.S. throughout the first decade of the 21st century has been a firm commitment to avoid defl...

This paper examines if US monetary policy responds to asset prices. Using real-time data we estimate a Taylor-type rule with an asset price variable. This variable refers to real estate prices, considering that those exhibit an important share in households’ asset portfolio. Moreover, especially real estate prices seem to have a close connection to monetary conditions. To analyze this link we d...

This article uses a DSGE framework to evaluate the role of monetary policy in determining the likelihood of encountering the zero lower bound. We find that the probability of experiencing episodes of being at zero lower bound depends almost exclusively on the monetary policy rule. A policy rule, such as the one proposed by Taylor (1993) which is based on the dual mandate is highly likely to lea...

ship exists between the quantity of money and the general level of prices. Confidence This paper introduces a mechanism for in this relationship, expressed in terms of generating a series of rules that characterize long-run rates of money growth and inflation, the money-price relationship, defined as the along with an accumulation of evidence suprelationship between the rate of growth of portin...

We assess the quantitative importance of expectation effects of regime shifts in monetary policy in a DSGE model that allows the monetary policy rule to switch between a “bad” regime and a ”good” regime. When agents take into account such regime shifts in forming expectations, the expectation effect is asymmetric. In the good regime, the expectation effect is small despite agents’ disbelief tha...

Whether a monetary policy (rule) aiming at stabilizing the economy efficiently should take exchange rate movements into consideration is an issue that recently has drawn a lot of attention. So far, however, no persuasive empirical evidence on the topic has been provided. Using well-established long-run economic equilibrium conditions building on traditional monetary views and by using cointegra...

M any central banks have long used a short-term nominal interest rate as the main instrument through which monetary policy actions are implemented. Some monetary authorities have even viewed their main job as managing nominal interest rates, by using an interest rate rule for monetary policy. It is therefore important to understand the consequences of such monetary policies for the behavior of ...

Under Australian conflict of law rules, courts can enforce foreign judgments for a sum of money, but not judgments that order a party to do or not to do an action. The article argues that the rule against enforcement of non-monetary judgments is no longer relevant in the modern world. It begins by setting out the Australian law on enforcement of foreign judgments and identifying the policies un...

In the Keynesian model we thought of monetary policy as exogenous in the sense that the money supply, Mt, was set exogenously. This is useful for understanding the model but doesn’t really describe how monetary policy works in practice. In the real world, central banks adjust the money supply (and hence interest rates) endogenously in response to changing conditions. In this set of notes we dis...

Monetary authorities have often voiced their concerns about a high debt level that could potentially restrain their ability to control the short-term interest rate as an instrument of monetary policy. However, monetary policy rules in the literature do not account for such constraints. This paper derives an augmented interest rate rule in which the response of the interest rate to expected infl...